Monster Beverage Corp (MNST)

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Monster Beverage 'uber bull case off the table' but still constructive argues analysts
By: Investing.com | January 18, 2023

Monster Beverage (NASDAQ:MNST) held its virtual investor meeting on Tuesday, with analysts at BofA and Wells Fargo maintaining their Buy ratings on the stock.

BofA analysts told investors in its note that the firm is also maintaining its $125 price target on Monster, but raising its FY22 EPS estimate.

"We continue to view the set up for MNST shares in 2023 favorably as scanner remains solid, aluminum prices continue to decline, and the company seems eager to return to repurchasing stock on a more consistent basis," said the analysts. "We raise our 4Q22 EPSe from $0.53 to $0.55 to reflect lowered FX headwinds, better expectations for US scanner data and improved gross margins given the pullback in aluminum."

Wells Fargo analysts maintained the firm's $115 price target on Monster, saying that the meeting didn't cause the story to change much.

"The key debate/opportunity here is margins. We think MNST took the 'uber bull case' off the table (broad cost deceleration), but nevertheless seemed constructive: easing in aluminum, freight (both domestic, international), and packaging, partly offset by running imported cans through COGS, and inflation in sugar and other ingredients- not dissimilar from commentary in November. So, again, constructive albeit not the 'blue sky' margin scenario," said the analysts.

Monster shares have declined 1.4% at the time of writing on Wednesday.

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